House of Representatives

Second Reading Speech

Ms Roxon (Attorney-General and Minister for Emergency Management)

I move:

That this bill be now read a second time.

Introduction

The Financial Framework Legislation Amendment Bill (No. 3) 2012 responds to the decision handed down by the High Court on 20 June 2012 in the matter of Williams v Commonwealth.

In that case the High Court invalidated the National School Chaplaincy Program.

A majority invalidated payments under the program on the ground that they were not supported by the executive power of the Commonwealth.

Successive governments have proceeded on the basis that no specific legislative authorisation was required for programs over and above the appropriation acts. However, in Williams, a majority of the High Court held that legislative authority is necessary for some spending.

This bill provides the necessary legislative authority.

Spending programs may be at risk despite the fact that money has already been appropriated by the parliament. The bill will ensure that the parliament's intentions in appropriating funding for programs are given effect.

The programs supported by the bill include the National School Chaplaincy and Student Welfare Program. This program is widely supported for its assistance for students. The government is committed to maintaining the funding for the chaplaincy program.

The bill also amends the Financial Management and Accountability Regulations of 1997 to include a new schedule which specifies relevant grants and programs.

This is a prudent approach in the light of the new requirement identified by the High Court, and it is designed to ensure administrative certainty.

But this approach does not involve any departure from the government's continuing commitment to funding a broad range of important community programs.

And it must be recognised that the Williams decision has no implications for Commonwealth agreements and payments which are already authorised by legislation; for example, benefits under the social security legislation and funding for private schools under the Schools Assistance Act 2008.

The decision also has no implications for Commonwealth agreements with and grants to the states, including grants in relation to health, education, transport, roads and the environment.

Agreements and payments for the ordinary services of government are also unaffected by the decision.

No remedial action is necessary in relation to these agreements and payments.

Williams v Commonwealth

The Williams case involved a challenge to the constitutional basis for the Commonwealth's activities and expenditure in relation to the National School Chaplaincy Program.

A majority of the High Court invalidated the making of payments by the Commonwealth under the chaplaincy program on the ground that they were not supported by the executive power of the Commonwealth. In particular, four of the justices did so on the basis that the Commonwealth executive government could not enter into agreements and make payments under the chaplaincy program without legislative authority. Appropriation legislation was not sufficient; nor was section 44(1) of the Financial Management and Accountability Act of 1997.

The government is committed to maintaining funding for community programs, including the National School Chaplaincy Program and its successor program. The National School Chaplaincy Program and its successor program have delivered very valuable services for the benefit of students across Australia.

This program needs to be put on a firm legal basis as a matter of urgency, to enable payments to resume for the benefit of schools and students relying on the program.

Williams also has implications for the validity of Commonwealth spending programs that are not supported by legislation other than an appropriation act, where there may be a constitutional need for legislative support to be provided.

As I have already noted, many Commonwealth spending programs and agreements are already authorised by legislation-this includes most payments to individuals, and the Williams decision has no implications for such programs and agreements.

I have also already noted that the Williams decision has no implications for Commonwealth grants to the states or for agreements and payments for the ordinary services of the government.

Despite this, there remain a significant number of other spending programs and arrangements that are not supported by legislation other than an appropriation act. This bill will provide such legislative authority for those programs and arrangements.

These programs range from helping children with autism through to overseas aid payments. They include a number of payments to veterans that are not part of the social security system. They include a wide range of different programs such as industry development programs, environmental programs, education programs and health programs.

Every person who sits in parliament and wants to be part of a government has strong reason to support this bill which allows governments both now and in the future to fund important work for the Australian community.

Overview of the Bill

Let me provide an overview of the bill. The Financial Framework Legislation Amendment Bill (No. 3) 2012 will amend the Financial Management and Accountability Act 1997 to establish clear legislative authority for the Commonwealth to make payments in relation to particular programs, grants and arrangements. Transitional provisions in the bill protect programs, grants and arrangements in place before the bill commences.

It is critically important that recipients of Commonwealth grants and other payments who act in good faith consistently with the arrangements under which those payments are made should not be left in any doubt about the validity of the payments. The government has been careful to identify grants and programs where a question might be raised about the need for legislative authority.

Schedule 1 to the Bill

Schedule 1 of the bill inserts a new section 32B into the FMA Act to provide the requisite statutory authority for Commonwealth spending, where no other legislative authority exists. It will empower the Commonwealth to make, vary or administer arrangements or grants under which public money is, or may become, payable, if the arrangements or grants or programs are specified in regulations.

The bill thus provides a mechanism for regulations to be made to provide legislative support for both existing programs currently identified which may require legislative support and also for future programs. The bill also makes clear that the power to make arrangements and grants is exercisable subject to compliance with the requirements of the FMA Act. The proposed amendments thus require ministers or officials to stay within the accountability regime established by the FMA Act and instruments made under it.

Schedule 1 also clarifies that the proposed amendments will not, by implication, narrow the executive power of the Commonwealth. The schedule provides that decisions under the proposed amendments to the FMA Act are not decisions to which the Administrative Decisions (Judicial Review) Act 1977 applies. That act has never applied to Commonwealth spending decisions of the kind to which the proposed amendments apply, and it is appropriate that this continues to be the case.

Schedule 2 to the b ill

Schedule 2 to the bill proposes to amend the Financial Management and Accountability Regulations 1997 to specify particular grants or programs, in accordance with the proposed amendments to the FMA Act which I have already outlined. The schedule contains 427 grants and programs, including the National School Chaplaincy and Student Welfare Program.

In keeping with a generally prudent approach, many of the matters prescribed in the schedule have been included out of an abundance of caution.

The bill will ensure these grants and programs have specific legislative authority over and above the appropriation acts. Direct amendment of the regulations by legislation is an efficient means of providing support, with the direct authority of the principal act, for the wide variety of relevant grants and programs provided by governments. This technical approach has been adopted in other circumstances where amendments to details appropriately set out in regulations may be required as a matter of urgency.

Conclusion

This bill is a measured, appropriate and necessary response to the Williams decision.

It will ensure that the government can maintain funding for important community programs, including the National School Chaplaincy and Student Welfare Program.

It has been designed to address the new requirement for specific legislative approval of spending programs identified by the High Court.

Before I commend the bill to the House, might I just put on record my thanks to the many staff and officials in the Attorney-General's Department and the Department of Finance and Deregulation, many of whom worked very long hours, including through the night last night, to ensure that this security can be provided to those who are recipients of grants from the Commonwealth and provide extraordinary benefit within the community. I commend the bill to the House.

Leave granted for second reading debate to continue immediately.